Good Grape Wine Company

Will Yellow Tail Find More Green?

Australia, a wine darling in the U.S. for most of the past 20 years, fell prey to Newton’s Law of Motion and the coloring of the bruising from the tumble down, in addition to being black and blue, is also yellow and black.

Aside from grappling with a myriad of structural industry and world currency issues, the Aussies have also had to grapple with the fact that their number two import market, the U.S., has had its wine cognoscenti turn their back on the perceived plumped up juice from Oz, a fact that was contributed to in no small measure, I believe, by the ubiquity of Yellow Tail – the inexpensive, redolently sweet, duotone in taste and packaging wine brand that grew case sales 3180% from 2001 to 2008, as reported by the New York Times.

To mix metaphors, where perception is reality, one bad apple (Or three if you count Yellow Tail category imitators as well as Robert Parker, Jr.’s legacy proclivity for Mollydooker) has spoiled the bunch, at least in the minds of wine influencers.

Tom Steffanci, President of Yellow Tail brand owner W.J. Deutsch & Sons, noted to Shanken News Daily (SND) in April, “…It’s so important that we never compromise on quality…you can’t fool consumers on quality…” However, wine tastemakers don’t think much of the Yellow Tail quality nor are they often shopping in the $6.99 price category.

Consequently, the brand that begat a category casts a pallor over an entire country’s wine. As one Australian wine marketing rep recently told me with a deep sigh, “This is the toughest job in the wine business.” A job, by the way, that includes aggressively trying to market Australian wine as being borne of terroir and regionality, a job, indeed, that evokes salmon swimming upstream into the waiting maw of a hungry bear.

Yellow Tail’s sales have plateaued in the last two years at 8.3 million cases and recent statistics from Australian wine export reporting indicates that total Australian volume to the U.S. dropped 19% in the year ending in June. This makes sense given that Steffanci indicated to SND that the brand represented around 40% of Australian wine sales in the U.S.

This subtext leads to an interesting question, one I’m sure the Australian wine marketing folks would also like the answer to: Is Yellow Tail a declining brand, victim of the “Derision Decision” – the point in time where something grows to such popularity that it transcends ‘hot with cachet’ to ‘not cool,’ a victim of the cultural zeitgeist?

The answer to that question may be an indicator to when the overall category of Australian wine sales might recover, at least from a perception perspective which can lead to a sales recovery in the upper reaches of price tiers, not anchored by their mates in the $6.99 category.

Doubtless, it’s not schadenfreude to suggest the Australian wine marketing folks might not be terribly upset if Yellow Tail shrunk from its ubiquity and, by proxy, it’s mindshare that equates to, “Australian for wine.”

Already, some East Coast liquor and bottle shop sales data (IRI provided by Wine Australia) shows that Australian wine priced $15.99 to $19.99 was up 24% in the fiscal year ending in June.

This rooted in reality but still hypothetical question of whether the Australian category is tethered to the relative misfortune of Yellow Tail in order to makeover perceptions is especially interesting given that 85% of every man, woman and child over the age of 21 is expected to see at least one Yellow Tail marketing message before the end of W.J. Deutsch’s fiscal year in March of 2012.

I guess we’re about to find out…

The New York Times (NYT) recently highlighted Yellow Tail’s new advertising and marketing campaign. With a shift in positioning from the nebulously adventuresome, on the go-oriented and short-lived, “Open for Anything” to the equally nebulous, but brand reinforcing “The go-to,” Yellow Tail is attempting to incrementalize and grow their flat case sales.

Brands face this conundrum all the time in the brand growth cycle. Explosive growth doesn’t always remain so and brands enter into an inevitable maturity phase: Do we push growth along or innovate? The unspoken question being, “Do we milk this sucker or do we take a left turn and try to reignite growth?”

At least for now, Yellow Tail is taking the safe route. In the words of Renato Reyes, Chief Marketing Officer (CMO) at Deutsch, as quoted in the NYT’s, he said Yellow Tail as, “The go-to” is “trying to own ‘occasionality’” and be, “the spine of (consumer) purchasing behavior.”

A look at their media mix indicates that their digital activity is skewing female with its current focus on the young female movie Bridesmaid on Facebook in addition to late night television with its young male audience and lifestyle channels that hit a broad, culturally literate, age-spanning audience. Apparently, Yellow Tail is going for reach in trying to hit a mass segment of people that are likely wine-interested, but not wine enthusiastic (see all the creative here).

By trying to be the “spine” of wine purchasing behavior, they’re trying to create brand loyalty, notoriously difficult to achieve in wine, but akin to regular purchasers of any other consumer goods where repeatable familiarity drives business.

As Reyes noted to the NYT’s, if every Yellow Tail consumer makes a purchase, “One more time, that would represent 10 percent growth.”

Incrementalize.

In my opinion, this audience traded up a price level to Malbec and Moscato, but that’s anecdotal and definitely beside the point.

Meanwhile, an industry hangs in the balance… or does it?

Some tastemakers are coming back around to Australia as evidenced by a recent story by Jay McInerney in the Wall Street Journal where he noted in a similarly themed article about Australia’s current wine misfortune, “I’m ready and willing to revisit Australia.”

So, where does this leave Australian wine that doesn’t have a kangaroo? Is it wearing a bumblebee colored hairshirt, casually waiting for one brands decline in order to catch its next wave of momentum? Will Yellow Tail find additional green, continuing to leave fine Australian wines in the red? I suspect the answer is no. But, regardless of Yellow Tail’s sales, and even if re-emergent, Newton’s Law of Motion also states that when a force is directed at an object it accelerates in proportion to and in the direction of that force.

Inexpensive plonk and marketing campaigns aside, I suspect that Yellow Tail and Australian wines of character can co-exist and the real force that is starting to accelerate are the U.S. wine influencers and tastemakers, the progenitors of the, “Derision Decision,” who will soon direct their energy on the good in Australia and not their perception of the bad.

That’s a force (and trend) worth watching and one that Newton, also a wine drinker, would approve of.

Comments

If the marketers had brains they’d just triple the price of Yellow Tail and save time and money. They might sell fewer cases, but would probably sell enough to the next gullible crowd that they’d make the same amount of money. In the process, the producers might even consider upgrading the product, since it would already cost too much anyway…

I’ll take my thanks and commission offline.

On 09/26, .(JavaScript must be enabled to view this email address) wrote:

In my view, Yellow T continues to push the rest of Aussie wines into the mosh pit of “who cares”, for about 88% or 89.2% or so of alcohol / beer / wine consumers here on the West Coast. Wherever you find Bud Light, Yellow Tail is right there too. Sad for the rest of the Aussie wines that they have to fight for sales among the remaining small percentage of wine consumers.

Knowing the best wine for a particular meal or recipe is one of the toughest thing a wine master/enthusiast can learn. I mean you can’t really tell right at that first moment, it’s a continues learning and discovery.

I suspect the answer is no. But, regardless of Yellow Tail’s sales, and even if re-emergent, Newton’s Law of Motion also states that when a force is directed at an object it accelerates in proportion to and in the direction of that force.

wine consumers here on the West Coast. Wherever you find Bud Light, Yellow Tail is right there too. Sad for the rest of the Aussie wines that they have to fight for sales among the remaining small percentage of wine consumers.

Yellowtail is not our finest drop of plonk in that price range, but seems to have the biggest sales budget. As often is the case a big selling domestic brand abroad is scorned bty rhe locals, the same could be said about many Aussie lagers that are not drunk here in numbers but is consumed passionately by those abroad. If you ever visit Perth we do wine tours and can take you to more than a dozen wineries where you will sample equally as good wine for a few cents cheaper.

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